Outsourcing Supply Logistics for Health Commodities in Africa

Outsourcing of health-commodity supplies to third-party logistics providers is one of the ways of reducing costs and/or improving service levels in the public sector. This paper evaluates three forms of outsourcing: full outsourcing of inventory management, partial outsourcing of specific activities, and contingent partial outsourcing of specific logistics activities. It notes that, in Africa, contracting-out supply logistics has mostly taken the form of partial outsourcing of transportation only or storage and transportation of specific health commodities to all or selected geographical regions. Partial outsourcing offers limited benefits since it cannot provide adequate pressures on public-sector logistics to be efficient or maintain uninterrupted supplies in times of catastrophes. Improvements in logistics performance achieved through partial outsourcing should not mask the need for more expansive arrangements that support not only partial outsourcing but also full outsourcing in situations of inefficiency and in times of supply-disruption catastrophe.